Maharashtra RERA Proposes Mandatory Separate Bank Accounts for Real Estate Developers

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The Maharashtra Real Estate Regulatory Authority (RERA) has introduced a significant proposal aimed at enhancing transparency and accountability within the real estate sector. Under this proposed system, real estate developers will be required to adhere to a new set of regulations regarding the management of project funds.

According to the proposal, before registering a project with RERA, developers must open three separate bank accounts in a single bank. These accounts serve distinct purposes to ensure proper handling and utilization of funds.

Firstly, developers must establish a "collection account" to consolidate all payments from allottees, including charges for parking, amenities, and other fees, except for taxes and statutory duties. However, withdrawals from this account are strictly limited, with only an auto sweep facility allowed to transfer a minimum of 70% of the funds to the next designated account.

The second account, termed the "separate account," is dedicated solely to cover construction and land costs associated with the project. Seventy percent of the funds collected in the collection account must be deposited into this separate account. This segregation ensures that funds earmarked for a specific project are utilized exclusively for its development, thereby safeguarding consumer interests and promoting financial discipline.

Lastly, the "transaction account" allows developers to access up to 30% of the total collections received in the collection account for expenses not directly related to land and development costs. This account provides developers with flexibility in managing project-related expenditures while maintaining oversight and accountability.

Furthermore, the proposal imposes stringent regulations on withdrawals and transfers between accounts, requiring approval from RERA for any changes to bank accounts. Additionally, banks are tasked with monitoring account activities and flagging any suspicious transactions to the authority, further enhancing regulatory oversight.

Overall, the proposed system seeks to standardize the management of project funds, mitigate risks associated with fund mismanagement, and instill confidence among consumers and stakeholders in the real estate sector. Stakeholders are invited to submit public comments on the proposal by April 15th.